An American exporter has a claim of 500,000 Swiss francs with a maturity of 3 months On the spot foreign exchange market the quotation of the Swiss franc against the dollar is CHE 1 = USD 0.65

On the forward market, it is CHF 1 = USD 0.64

The exporter fears a significant fall in the Swiss currency He wishes to protect himself against it by resorting to a European currency option traded on the over-the-counter market, because the extreme volatility of the Swiss franc means that it should not be eliminated The assumption of a rise in the currency in which the claim is denominated

1. What should the exporter do to protect against currency risk? (5 points)

The premium associated with the option negotiated by the exporter is 3 amencains per Swiss franc.Three months later, when the debt matures, the exporter notices that the rate of the Swiss franc expressed in dollars stabilized at CHF 1 USD 0.57

2 What should the exporter do? (5 points)

3. Expressed in dollars, what is the value of the 600,000 Swiss francs obtained by the re-exporter on account of his claim? (5 points)

4 What is the cost of the 15 ports cover)

5. What would the value of the 500 OCio CHF have been expressed in dollars if the exporter was not covered?

6. What would the exporter have done if he had found that at the maturity date of the claim the price of CHE had been CHF TUSO 022 16 points

7. Expressed in dollars, what would then be and the value of 500,000 CHE (5ons